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Thursday, 13 January 2011

Economic Route to Iraqi Stability

Building a strong relationship with the new Iraqi government to foster security and economic stability is paramount; but the West should not lean on Iraq to counter Iran, as Iraq at present simply isn’t strong enough.

As we await the formation of the new Iraqi cabinet, the question of Iraq’s role in the wider Middle East, and which way it may lean in international terms, arises. The West should concentrate on facilitating Iraq’s economic development; whilst at the same time remain central partners with the domestic Iraqi security forces. Agreeing to remove troops and withdraw from Iraq should not mean an abandonment of the fragile state.

Michael Eisenstadt has noted the decreasing number of Provisional Reconstruction Teams operating in Iraq, from 29 in 2009, to 16 in 2010.[i] In addition, 2011 will see only two temporary Embassy Branches, in Mosul and Kirkuk, which are planned to be shut down in 3-5 years. This would leave just two permanent consulates at Erbil and Basra, which as Eisenstadt argues, could potentially isolate the Embassy in Baghdad, and may impact detrimentally to the influence of the US in areas outside of urban centres.[ii]

On the positive side, nearly all of Iraq’s governmental players (except for the Sadrists) have expressed some inclination and support for a strong US-Iraqi relationship in terms of security. If Iyad Allawi does manage to form an effective Security Council body, then these ties have a greater chance of being realised. What the US and Western influences should not do however, is to pressure Allawi unduly into security confrontations with Shi’ah powers in order to stifle Iran’s growing reach. Rather, combating Iranian tentacles within Iraq, given the imminent withdrawal of forces, must be sought through regional economic cooperation and growth, and the development of a new Iraqi identity on a firm footing of domestic security. (A good test of Iraqi security will be the upcoming Ashura ceremonies, where US forces will leave all arrangements to the Iraqis).[iii]To be sure, the West cannot afford to let Iran dominate Iraq; nor can Iraq afford a re-emergence of Baathist elements that are likely to increase sectarian divides. Instead, Iraq must be given time and support in order to fashion its own plural identity. To do this, security assistance from the US is needed. So too is economic development and prosperity.

Despite taking an age to form a new government, Iraq has shown the desire to increase its economic weight, and a clear sign of the government’s intent was signalled in early December with the invitation to build four large power plants in the Southern Iraqi governorates.[iv]The aim is to increase generating capacity by 2,750 Megawatts, and is part of a larger plan to develop energy infrastructure to combat the dual problem of current power shortages, and growing domestic demand. Indeed, Iraqi domestic demand is set to grow to 87 million barrels per day (bpd) next year, while spare oil capacity is set to fall dramatically.[v]It is a problem that affects the entire Middle East, as the IEA forecasts a projected demand increase of 85 per cent for the region as a whole in the period 2008-2030.[vi]

Another example of expansion is found at Iraq’s biggest oilfield in Rumaila, where BP, China National Petroleum Corp (CNPC) and Iraqi State owned South Oil Co have agreed to a joint project that will see the site expand to become the 2nd largest producing oilfield in the world. As part of this, the consortium plan to triple production at the field to 2.85 million bpd.[vii]

The point here is not that foreign firms and Western capitalist interests are fulfilled by exploiting Iraq’s natural resources; but rather that by international investment and increased production, Iraq will benefit domestically from increased revenues, and will be bolstered within the region as a key economic hub and power. On top of this, integrating Iraq into a wider system of international economies and trade lessens the likelihood that Iraq is manipulated by its immediate neighbours, as having a multitude of trading partners increases Iraq’s chances of maintaining its independence.

For a country with such a diverse populace as Iraq, establishing a plurality of regional influences must be accomplished if sectarian divides are to be conquered, and a dissent into violence is to be avoided. Here, growing economic ties can be used to facilitate strengthening political ties as Iraq interacts with all of its neighbours, rather than depending on a select few.

This may prove difficult at times for the West, as Iraq’s links to Iran, for geographical, historical and cultural reasons are very real. There is no utility, therefore, in Western countries burying their heads in the sand and ignoring the ties, or attempting to dismantle them altogether. Leaning on Iraq in order to pressure Iran at this premature stage of the new Iraqi state would do more harm than good to Iraq’s stability and development, and in turn, would only benefit Tehran’s hegemony within the region, turning its ‘spoiler power’ into proactive influence.[viii]

The West must therefore look to engage with Iraq economically, and bind the state into a system that will support stability and encourage growth.